With Aid, Europe Keeps Pressure on Greece to Restructure Economy

Yannis Stournaras, the finance minister of Greece, met with Christine Lagarde, the managing director of the International Monetary Fund, in Brussels on Monday.Credit
Olivier Hoslet/European Pressphoto Agency

At the same time, as many as 5,000 Greeks, including hundreds of angry police officers on motorbikes, joined demonstrations here against the austerity plans of a government still wobbly after skirting collapse last month. Protesters were particularly incensed by renewed calls by international creditors to cut 15,000 civil service jobs and to put thousands of public workers on reduced wages ahead of possible dismissal, in a country where unemployment already tops 27 percent.

The mayor of Athens was briefly hospitalized Sunday night after workers assaulted him as he left a meeting to discuss municipal layoffs, and the mayor of Greece’s second-largest city, Salonika, threatened to quit Monday rather than face deeper cuts.

The protests have flared after a period of relative calm in Greece and revived questions about the ability of Prime Minister Antonis Samaras to carry out the cuts and changes being demanded — and indeed about the future of his government.

International creditors have already granted more than $257 billion in financial assistance to the euro zone’s crisis-hit countries, but the demands for further budget cuts and structural changes that have accompanied the aid are badly dividing the governments in Greece, Italy and Portugal.

Last week, the government of Prime Minister Pedro Passos Coelho of Portugal, considered something of a model nation by international markets and creditors, nearly came apart as support waned for the austerity program he was charged with carrying out in exchange for Portugal’s $100 billion bailout.

At the top of the agenda at the ministers’ monthly gathering in Brussels was how much of the next batch of a promised $10 billion in emergency aid they should release to Greece.

At a news conference in Brussels, the Dutch finance minister, Jeroen Dijsselbloem, said euro ministers had decided to make a disbursement of $3.2 billion, with a further disbursement of $650 million in October, on the condition that the country meets restructuring commitments by July 19.

Photo

A school traffic guard joined a demonstration outside the Interior Ministry in Athens on Monday.Credit
Petros Giannakouris/Associated Press

Athens has little choice but to comply. Three years after the government’s debt crisis blew a hole in its public finances and threatened to knock the country out of the euro zone, Greece remains dependent on two aid packages of a little over $300 billion.

Payments of smaller amounts of bailout money began late last year, after serious concerns among Greece’s lenders that the country was backsliding on promised changes like dismantling protected sectors of the economy.

But it is proving increasingly difficult for Mr. Samaras to balance the demands of Greece’s creditors against the anger and exhaustion of the public, and to straddle the widening divisions the austerity program is causing within his fragile governing coalition.

Mr. Samaras was forced to reshuffle his government on June 24 after his junior coalition partner, Democratic Left, withdrew to protest an earlier decision by Mr. Samaras to shut down the state broadcaster, the Hellenic Broadcasting Corporation.

That step, a unilateral decree to eliminate some 2,600 jobs, set off a political firestorm in Greece and seems to have backfired. Employees have continued to occupy the broadcaster’s huge headquarters, pumping out underground broadcasts of news and culture programs through surreptitious satellite feeds.

The episode underscored just how difficult it is for any Greek government to cut the ranks of its bloated civil service. Most state employees are protected by the Constitution, but even those who are not may prove difficult to fire.

Of the 150,000 government job cuts sought since 2010, 128,000 have been achieved, but only through retirements, which only shift the financial burden to the pension system. Until the attempt to shut down the state broadcaster, Greece had not fired a single government employee. But as long as its international lenders continue to demand 15,000 job cuts, more social friction may be inevitable.

The government will also move ahead with a procedure to put 12,500 civil servants into a so-called mobility program, giving staff members reduced wages for several months before moving them to another public sector post or firing them, according to a government official who asked not to be named because of the confidential nature of the talks.

The Athens mayor, Giorgos Kaminis, issued a statement after his hospitalization blaming the head of the authority workers’ union, Themis Balasopoulos, for instigating the assault, accusing him of “longstanding involvement in the client-patron system of local government.”

In a hasty escape, broadcast on Greek television, Mr. Kaminis was escorted away from the scuffle and jumped on the back of a waiting motorcycle to flee the scene after assailants broke all the windows in his car.

Liz Alderman and Niki Kitsantonis reported from Athens, and James Kanter from Brussels.

A version of this article appears in print on July 9, 2013, on page A9 of the New York edition with the headline: With Aid, Europe Keeps Pressure on Greece to Restructure Economy. Order Reprints|Today's Paper|Subscribe